Page 58 - Global Political Economy_Understanding The International Economic Order

THE NATUR E OF PO LITIC AL ECO NOMY
adherents of the public-choice position believe in free trade, as do I.
However, the commitment to free trade must be based on a concept
of a national interest and the belief that free trade will benefit that
national interest and not just the interests of those in power at the
time.
A state or national government must fulfill several social, eco-
nomic, and political functions to retain the loyalty of its citizens. Pro-
vision of security for its citizens both at home and abroad is the pri-
mary function of the state; no other institution can relieve it of this
responsibility. Another function is to promote the social and eco-
nomic welfare of its citizens and to guarantee minimal standards of
individual justice; although the social welfare function has long ex-
isted, as James Mayall has emphasized in discussing what he calls
“the new economic nationalism,” economic welfare has become inti-
28
mately joined to national citizenship in the modern world. Without
a state of their own, individuals have no access to welfare programs.
The state also provides an identity for its citizens; it appears to be
inherent in human nature that individuals need to be part of some
larger social grouping. In many societies there is growing concern that
globalization is leading to loss of a separate identity for individual
citizens and individual states. This situation reinforces my belief that
political economy’s concept of an economy as markets embedded in
a sociopolitical system is not only accurate but that it also provides a
very useful tool of analysis.

Conclusion
This book defines political economy as the interaction of the market
and powerful actors. Both components are necessary, and one cannot
comprehend how either domestic or international economies function
unless he or she understands both how markets work and how states
and other actors attempt to manipulate markets to their own advan-
tage. As I stated above, markets have an inherent logic of their own
as they respond to changes in relative prices, constraints, and oppor-
tunities. Therefore, to analyze the functioning of an economy, one
must begin with at least a rudimentary knowledge of how the disci-
pline of economics understands the economy as a market or price
mechanism, and this is the focus of the next chapter.

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James Mayall, Nationalism and International Society (New York: Cambridge Uni-
versity Press, 1990), chap. 6.
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